Factors needed to be an insurable risk?
- large # of similar exposures
- significant in scope
- measurable
- accidental
- non-catastrophic
Domestic Insurer
-within the state
Foreign Insurer
-outside of the state
Alien Insurer
-outside of the country
Stock Insurance Company
- “Capital Stock”
- stockholders
- stock dividends
Mutual Insurance Company
- policyholders
- policies at lowest cost
Reciprocal Insurance Exchange
-policyholders insure the risks of other policyholders
Reinsurers
-risks are accepted by 1 or more insurance company
Automatic Reinsurance
- “Treaty”
- contractually bound to cede a % of the risk
Facultative Reinsurance
-negotiated separately for each insurance contract
Lloyd’s of London
- insurance underwriters
- unusual and even speculative risks
Self-Insurers
-entirely financed by policyholder
3 types of insurance systems
- General Agency
- Branch Office
- Direct Response Marketing
Express Authority
-authority to act on behalf of a insurer
Implied Authority
-authority not expressed in contract, but is endorsed to carry on business
Apparent Authority
-appears to have authority to represent an insurer
Requirements to be a Legal Contract
- must be competent as to age and mental capacity (15 for NC Life)
- must be for legal purposes and no illegal elements
- must be an offer and acceptance
- must be consideration
Estoppel
-legal impediment to one party denying the consequences of its own actions
NAIC
-National Association of Insurance Commissioners
Parts of the Policy
- Declarations Page
- Insuring Agreement
- Conditions
- Exclusions
- Definitions
3 types of Hazards
- physical
- moral
- morale
speculative risk
- not insurable
- possibility of gain
pure risk
- insurable
- only a possibility of loss
Risk Management Methods
- Risk Avoidance
- Risk Assumption
- Risk Transference
- Risk Sharing
- Risk Reduction
